Industry Updates

The Union Cabinet has approved the policy framework to encourage measures for increasing oil and gas production from ageing fields. The Minister for Petroleum and Natural Gas, said, “Oil and natural gas production worth Rs 50 lakh crore is expected to be unlocked from this policy. The EOR Policy offers a 50 percent discount on cess charged for crude oil production and 75 percent discount on royalty charged for gas production after implementing EOR projects on existing assets.” An official statement said, “An increase by 5 percent in recovery rate of original in-place volume in oil production is envisaged, producing 120 million tonne additional oil in the next 20 years. In case of gas, an increase of 3 percent recovery rate on original in- place volume is envisaged, leading to additional production of 52 BCM of gas in the next 20 years.” The policy, having a sunset clause, will be effective for 10 years from the date of its notification. However, the fiscal incentives will be available for a period of 120 months from the date of commencement of production in enhanced recovery projects, the statement added.

Government of India plans to develop terminals at major ports. The Ministry of Shipping in consultation with the state maritime boards and major port authorities will execute the contracts. Cruise tourism is expected to gain some traction as the Union government plans to develop terminals at major ports to facilitate tourism activity. A single entity will be entrusted with the job of executing the operation and maintenance contracts for the cruise terminals. Essentially, cruise terminals at 4-5 ports would be operated and maintained by one player. The Ministry of Shipping in consultation with the state maritime boards and major port authorities will execute the contracts. The first tender is expected to be executed by the Maritime and Port Authority of Singapore and the O&M tender would include JNPT, Kochi, Kandla and Mangalore Port. The Union Shipping Minister said these terminals would be built by the government and tendered on O&M contracts to mainly international players who have the expertise to maintain them for certain duration of time. One terminal at the Mumbai port is being built by the government at an investment of Rs 1.97 billion. This will be tendered for an O&M contract upon completion.

The Centre proposes new financial model for building greenfield airports aimed at making air travel more affordable and addressing disputes related to tariff. Under the new financial model, the concession fee given by the airport operator to the concessioning authority will be based on a “per passenger aeronautical model”. The passenger-based model will also be the base of the bidding process. The new model will encourage increased private investment. Currently, the transaction structure for airports, run under joint venture route, is based on revenue sharing model.

Government of India is considering easing the mandatory 80% land acquisition condition before highways construction can start to speed up road building and start more projects before the next elections. A top government official said that this condition could be relaxed to 50% mandatory land acquisition. The road transport and highways minister is likely to take the final call on the proposal soon. The land acquisition process for any project currently takes around one and a half year on an average. The land acquisition process doesn’t face too many problems in states such as Andhra Pradesh, Karnataka, Tamil Nadu, Telangana and Gujarat. Whereas, in states such as Uttar Pradesh, Bihar and West Bengal it takes time. Reducing the threshold will not necessarily mean projects will get stalled later as in last four years farmers have been more than willing to give their land because of increased and timely compensation. The government currently offers four times the market price for farm land. The government has also decided not to acquire land before the harvest season as it unnecessarily leads to creation of hurdles for farmers, therefore, delaying the handover of land. The road transport and highways ministry is hoping to deliver 300 national highways across country ranging close to 11,000 km and award 25,000 Kms by the end of the current fiscal.

Government of India has imposed standard conditions for as many as 25 sectors seeking environment clearance (EC) for expansion of existing projects or new projects. The government-constituted green panel, called the Expert Appraisal Committee (EAC) assesses the projects and makes recommendations, based on which the environment ministry grants the final EC. In order to bring uniformity on the stipulated terms and conditions across the projects, sectors, and as a general guide to EAC as well as project proponents, the ministry has prepared standard conditions for 25 sectors, the ministry said. The sectors include iron, steel, cement, coal, petroleum refineries industry, paper and pulp, hydro-electric projects, and industrial estates, among others.

The Environment Ministry has firmed up guidelines that will require every corporate seeking green clearance to set aside up to 2% of its capital investment for Corporate Environment Responsibility (CER). The guidelines make it mandatory for companies to set aside funds for CER over and above what is required for executing the environment management plan in a project affected area. While brownfield (expansion) projects would be required to earmark 0.125% to 1% of additional capital investment for CER purposes, the slab for greenfield projects ranges from 0.25% to 2% of the capital investment. The exact quantum will be decided for every project by the Expert Appraisal Committee when it comes up for green clearance. The subject has been in discussion for a while now with the ministry repeatedly insisting on creating a separate category for CER funds and projects, rather than assuming it to be part of the implementation of the environment impact assessment plan.

Government of India has imposed restriction on import of bio-fuels including ethyl alcohol and other denatured spirits, bio-diesel, petroleum oils and oils obtained from bituminous minerals other than crude, through an amendment in import policy. The import of these items, which was free earlier, will now only be allowed for non-fuel purpose on actual user basis. “Import policy of bio-fuels revised from ‘free’ to ‘restricted’ and allowed for non-fuel purpose on actual user basis as per the National Bio-Fuel Policy,” the Directorate General of Foreign Trade (DGFT) said in a notification.

The US has announced hefty preliminary anti-dumping duties on metal pipes imported from India, China and four other countries, in an aggressive tactic by the Trump administration to protect the American industry and lower the trade deficit. Six US pipe manufacturers had filed the antidumping complaint with the Commerce Department in January. Announcing the preliminary determinations in anti-dumping duty investigations of imports of the pipes, the US Department of Commerce said the six countries were selling the large diameter-welded pipe — used to transport oil, gas and other fluids — far below the fair price, and that dumping harms the US industry. India has been slapped with an anti-dumping duty of 50.55 percent. US imports of the pipe from India last year totalled USD 294.7 million. The other countries being hit with duties are China (132.63 percent), Greece (22.51 percent), Canada (24.38 percent), South Korea (14.97 to 22.21 percent) and Turkey (3.45 to 5.29 percent). Dumping occurs when a foreign company sells an imported product at an artificially low price. The US Customs and Border Protection will collect cash deposits from India and the five other importers, according to a statement by the US Commerce Department. The Commerce Department said it will make a final ruling in November on whether the pipe from India and China is dumped into the US market. If the independent International Trade Commission finds that US industry was not harmed from the imports, the duties will be refunded.

Indian Oil Corporation (IOC) will be investing about Rs.7,112 crore in infrastructure facilities in Tamil Nadu over the next three years. At the IOC group level — IOC and group company Chennai Petroleum Corporation Ltd — will be investing about Rs.37,112 crore in Tamil Nadu. The investments will be in pipeline expansion, construction of captive jetty, additional facilities for petrol and diesel handling, POL (petroleum, oils and lubricants) terminals at an outlay of Rs,7,112 crore in the next three years. Group company Chennai Petroleum will be expanding its refinery capacity at Narimanam to nine million ton per annum at an outlay of about Rs. 30,000 crore. These apart, the company will be investing in the city gas distribution network in Coimbatore and Salem where it has won the distribution bids recently.

Mangalore Chemicals and Fertilizers (MCFL) has received green clearance for Rs 1,547-crore expansion-cum-modernisation of its fertiliser plants in Karnataka. The company’s proposal is for energy improvement of ammonia and urea plants, expansion of DAP/NPK plant and Poly Carboxyl Ether (PCE) plant at the existing premises in Panambur in Mangalore. The estimated cost of the project is Rs 1,547 crore. The MCFL complex is spread in an area of 192 acre. The proposed developments/facilities are planned within the existing premises. The company’s proposal is to increase production capacity of ammonia from 2,47,500 tonnes per annum (TPA) to 3,28,500 TPA, urea from 4,29,000 to 5,69,400 TPA, DAP and NPK fertilisers from 4,01,500 to 14,01,500 TPA and Sulphonated Napthalene Formaldehyde (SNF)/poly carboxylate Ether (PCE) from 85,000 to 1,03,000 TPA. Poly Carboxyl Ether (PCE) acts as super plasticizers and is currently being imported in the country. The proposed new facility within the MCFL plant would be contributing in our country’s ‘Make in India’ program. Since the fertiliser subsidy are paid by the government taking into account energy consumption, the MCFL’s proposed project aims to bring energy norms to best achievable industry levels to continue profitable operation.

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